Restaurant owners railed against a proposal to add up to 12 additional liquor licenses for restaurants and hotels in Watertown saying it would devalue their own businesses.

Erin Baldassari

Restaurant owners railed against a proposal to add up to 12 additional liquor licenses for restaurants and hotels in Watertown saying it would devalue their own businesses.

Although no official policy decision was made at the May 15 joint subcommittee meeting of the rules and ordinances, economic development and public safety committees, the meeting ended in a vote 4-1 in favor of moving the discussion forward to the full Town Council.

Town Councilor John Donohue, who chairs the rules and ordinances subcommittee and also owns Donohue’s Bar and Grill on Bigelow Avenue, said the town was not looking at adding more liquor stores, private clubs or grocery stores that sell alcohol.

Instead, the additional liquor licenses would be reserved for “on premise” licenses only – meaning only establishments where alcohol is poured for a customer and is consumed at the establishment.

“Here’s an opportunity have (the licenses) available,” Donohue told the TAB. “How do you make a vibrant mixed-use area? Wouldn’t you want the ability to have a restaurant or two? If you want them to build it, you have to have incentives. Having licenses available for good economic growth gives multiple avenues for tax revenue.”

Half a dozen restaurants owners spoke unanimously in their opposition to the idea. While everyone at the meeting agreed that hotels would help spur business for everyone, none of the restaurant owners accepted Councilor Steve Corbett’s sentiment that a “rising tide would lift all boats,” and more restaurants would mean more business for everyone.

“You’re trying to make a decision that affects the livelihood of families and people employed here,” said The Talk restaurant owner Kaz Keuchkarian at the meeting. “You went up on the meals tax, and that’s great, but it’s going to go down on the other side because you don’t have enough people to be able to facilitate that increase in business.”

Strategic growth

Many of the councilors cited the town’s Strategic Framework for Economic Development, a study approved in August last year, that suggests the town incentivize growth in underdeveloped former industrial cites in town.

Under the proposal, which at this point is subject to change by the full Town Council, the town would add two liquor licenses reserved for hotels only, and two liquor licenses for each of the five zones outlined in the study. The licenses would be geographically restricted in order to protect existing restaurants, Councilor Vincent Piccirilli said.

“We’re stuck in a situation where we have five areas of industrial properties that need to be developed and we can’t attract development, which is going to include restaurants, unless one of you goes out of business, and I don’t want to see any of you go out of business,” Piccirilli said.

Many business owners feared that added more licenses would encourage “big box” stores to come in. Halfway Café owner John Grasso said he saw it happen at Legacy Place in Dedham where the town reserved 10 liquor licenses just for that development.

Councilors said they weren’t looking at adding any more chains.

“If you think about restaurants like The Talk on Main Street that had to wait for another establishment to close before getting a liquor license – that’s the type of business we’re looking for,” Piccirilli told the TAB before the meeting. “Some other development zones, like where Walmart is looking to locate, that could be redeveloped to attract local street-level retail including restaurants, but we’d need to add liquor licenses to attract restaurants.”

Kathyrn Madden, a Watertown resident who helped draft the Strategic Framework, said the study was intended to support small owner-operated restaurants in places where they don’t exist currently.

“I don’t think we’re talking about wanting big huge restaurants, it’s more these kind of special restaurants that you all have,” Madden said. “I also want to remind you that Watertown is 30,000 people but within 10 minutes of Watertown there are 300,000 people and if we’re not known for something, and we should be known for food, those 300,000 people are just never going to stop in and visit.”

One restaurant owner audibly yawned while Madden spoke, summing up the sentiment that all the talk about economic development would translate instead to lost business for existing restaurants.

What’s at stake

On Thursday, after the TAB’s deadline, Casa de Pedro owner Pedro Alarcon will be going in front of the licensing commission to ask permission for a bank to use his liquor license as collateral for a loan.

To Alarcon, his liquor license has real value that can be turned into equity and then used as cash in order to grow his business. In this case, it’s worth $150,000.

“I’m using it so I can make my restaurants better,” Alarcon said. He also owns a restaurant in Billerica. “Restaurants are the thermometers of the economy, and it’s bad out there…but it’s not more restaurants that are the problem.”

Per state law, each town is granted a quota of liquor licenses based on the population – one for every 1,000 people (with some caveats when the population exceeds 25,000). Those licenses cannot be taken away when the population decreases, but if the town decides to revoke a restaurant’s licenses for cause, the town cannot give that license to another establishment and instead looses it permanently, said Town Attorney David Doneski.

Watertown used to have 34, but currently holds 33 licenses for restaurants, according to Town Clerk John Flynn. There are no “bars” in Watertown. Per town ordinance, all establishments that have an on-premise liquor license must also sell food.

Right now, if a new restaurant wanted to move to town, the owner would have to buy the liquor license from the current owner, and then win approval from the licensing commission.

Grasso said he bought an all-alcohol license in 1990 in Dedham for almost $200,000 and then later saw that devalued to $50,000 with the addition of Legacy Place. Mt. Auburn Grill owner Don Levy paid $50,000 in Watertown for a wine and beer license.

Technically, those exchanges are between business owners only since the licensing commission reserves the right to grant or take a license away for cause at any time.

Grasso warned the other restaurant owners that adding more restaurants would only flood the market and dilute the value of the existing licenses.

“Forget the economy. We deal in realities. I’m all in favor of a hotel in Watertown, but to dilute the market – what you’re doing is like the Feds printing more money. You’re diluting the value, you’re flooding it,” Grasso said. “There’s not going to be a synergy and all these things that they’re talking about. You’re going to loose business. It’s a reality. It’s going to happen.”

What’s next

Donohue called for a vote to get a sense of the committee members of whether or not the councilors should bring the idea forward to the full Town Council for further discussion.

District A Councilor Angeline Kounelis was the only councilor to vote against moving the idea forward.

“I cannot support this because I cannot foresee two liquor licenses in the Coolidge Square area,” Kounelis said. “The only recommendation I could support is for a hotel.”

Councilor Kenneth Woodland said he was on the fence, but said the idea was worth discussing.

“We’re not adopting policy right now, we’re just adopting an idea for consideration” Woodland said.

The full Town Council will now be able to weigh in on the idea and would likely take a vote to ask the administration to draft a proposed piece of legislation for consideration, which would then go back to the council for approval.

Piccirlli said it was a matter of figuring out what would be an appropriate model for Watertown.

“I don’t want any restaurant to go out of business; I want to add new places,” Piccirilli said. “We can discuss later on what the right number is or what the right way of implementing them is and what is the right way for the licensing board to control them, but I think we need to think about what is right for Watertown.”